Like the prices of fruit and vegetables, the American real estate market also has behavior and volatility that is affected by the seasons of the year
Just like the price of fruit and vegetables, the real estate market has behavior trends and fluctuations that are influenced by the seasons of the year. Anyone dealing with real-estate investments in the United States has to take into consideration the seasonal cycle and its influence on the market. Understanding the seasonal dynamics will give you a relative advantage over other investors. So let’s get into some of the details.
The Hot Season
The hot season in the U.S. real- estate market is actually not summertime, but rather spring. The budding flowers and the sun peeking out between the clouds during the month of March mean the market is warming up and that it will come to a “boil” by the last day of May and stay hot until July. The main reason is school. Parents have to register their children for educational institutions in time according to their new home’s location. This season is when more than 45% of real estate transactions are actually closed.
So it seems like this would be the ideal time to sell or buy, right? Actually, the answer is—not always.
With the wave of demand also comes a wave of supply, waves that balance each other out in normal markets. During this season, sellers are usually making plans for the coming year and as the date advances into summer, their level of stress goes up more and more. Some are obviously not experienced poker players and just want to close on a deal as quickly as possible. On the other hand, parents of children who have already graduate are under less stress and they have all the time in the world, until their retirement, to sell the family home. Therefore, in this kind of market, it’s a good idea for an investor to determine who the seller is and what their motivation is, and to present an offer accordingly. Do they have school-aged kids? It’s possible that the seller is more stressed about the price or the conditions of the sale.
The Divorce Season
From August to December is when the real buyers’ festival begins. In this season, which is also known as the months with a record number of divorces, we come across more and more motivated sellers. This usually means sellers who sat on their houses too stubbornly, trying to maximize the price they’d get, and then found themselves stuck—and now that autumn’s here, they have to sell. Additionally, there are couples splitting up, which is actually the dream of every investor, because most will do anything possible not to see their former spouse’s face ever again, and just want to put everything behind them—including any shared real estate.
One “landmine” to take into consideration is that as winter gets closer, the number of renters goes down. Therefore, starting to see a profit on low-cost investments during this season might take a little more patience.
The off Season
In the winter months, especially in countries within the northern hemisphere, the market seems to go into hibernation. But notice I said “seems” to go into hibernation, because under the ice, there’s still lots of activity taking place. Sellers still stuck with merchandise on their hands are going to be more prepared to take offers at a seriously reduced price. “Mirrored” real estate activity is also taking place near ski locations and sunbelt states like Florida and Arizona. During this season, lots of deals are signed with the intention of closing in advance of (or after) taxation year-end dates. There’s also lots of renovation activity in advance of the spring, winter repairs and teaming up of sellers to agents as well as preparations for large-scale construction projects. This is an excellent time for investors to get organized from a budgetary and administrative perspective, and also a solid time, business-wise, to locate off-market deals.
The Holiday Season
America isn’t blessed with that many holidays, but an urban legend says that the best deals are those signed right before Christmas, on December 23, and on Easter, maybe because of the festive atmosphere. , Fridays, too, are excellent days, psychologically speaking, to close deals. The seller wants to leave for the weekend with a clear mind, unstressed about the sale, making Friday morning an ideal time for a buyer to present a final offer.
Every season has its own advantages and disadvantages. A little insight into the seller’s mindset and awareness of the influence of the seasons will help us ride the seasonal waves and make smart investment decisions.
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